# You owe $21 trillion **URL:** \ **Category:** Great Debates\ **Created:** [March 17, 2018, 3:12am UTC](https://boards.straightdope.com/t/you-owe-21-trillion/810711 "2018-03-17T03:12:04Z")\ **Posts on this page:** 20\ **Page:** 4
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [March 22, 2018, 7:00pm UTC](https://boards.straightdope.com/t/you-owe-21-trillion/810711/61 "2018-03-22T19:00:06Z")
I was being, ahem, conservative. There is the risk of higher chance of bankruptcy, and there is the risk of the zombies being at your door ready to eat your brains. Maybe someone should write a dystopia where the cause of the collapse is Donald Trump defaulting on US debt. It’s a more likely scenario, alas, than lots I’ve seen. ---
**Author:** ![WillFarnaby](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/willfarnaby/32/514_2.png) [@WillFarnaby](https://boards.straightdope.com/u/WillFarnaby)\ **Post date:** [March 22, 2018, 8:27pm UTC](https://boards.straightdope.com/t/you-owe-21-trillion/810711/62 "2018-03-22T20:27:09Z")
> [@Hellestal](#): > > You guys are both right, of course, about one fundamental issue here: a default completely changes the risk profile of a country. Yes. But it’s not just “risk” that’s at issue here. > > When a micro instructor draws a demand curve on the board, they are likely to say something along the lines of “This represents the relationship between the price and the quantity demanded, _all else equal_”, or “_other determinants of demand held constant_”, or even back to the Latin [“_ceteris paribus_”](https://en.wikipedia.org/wiki/Ceteris_paribus#Economics) if they want to add an old-fashioned touch. > > Something similar is said for supply curves. Then the two curves are drawn on the board together, and price and quantity are found from their intersection. This is how micro people do. > > But the entire purpose of having two curves – supply & demand, or a budget constraint & indifference curves, or IS & LM – is to recognize that the stuff that pushes one curve around tends _not_ to be the stuff that pushes the other curve around. For simple stylized intro examples on the blackboard, it’s most often the case that only one small thing has changed. _That does not describe the US debt._ Defaulting on the US debt would nuke the global financial system. In blackboard terms, it would affect **both supply and demand simultaneously**. In macro, all else is never equal. Ceteris is no longer paribus. > > It is a strange question to ask “What happens to demand for loanable funds?” if the entire financial system has been nuked. There are other questions to ask, not least of which is “What happens to the _supply_ of loanable funds, if every bank in the country becomes insolvent overnight?” There are a thousand other things we could talk about, too. What is even meant by “loanable funds”? Is it the primitive graph from intro macro – which ignores the banking sector completely – or is it a deeper concept like the loanable funds doctrine? The majority of the money supply in this country is created and sustained by the private banking system… so why would we be using an abstract market for “loanable funds”, which doesn’t even include an explicit financial sector, when it is that very financial sector that maintains our money supply? > > Or what about imports? The US imports more than it exports nearly every year, and we pay for those exports with paper. So what happens to the entire system of world trade if the very same paper that is used as the foundation for the world financial system suddenly were to stop existing? How could the US continue to finance our imports if we suddenly reneged on payment for the imports we received yesterday? Why would anybody else send us more imports tomorrow? What happens to global supply chains for every major manufacturing firm in the country? Why would anyone accept payment in US dollars at all – or the Treasuries that represent future payment of those dollars – if the government broke its promise in such spectacular fashion? And we haven’t even gotten to the role of the US dollar – mostly in the form of Treasuries – as the most important global reserve currency. It’s not just US banks that would suddenly be insolvent. Global banks that use the US dollar for reserves would also, quite suddenly, have an enormous hole blown in their balance sheets. How would they be able to finance their own operations? > > The question that’s being asked is what happens if an inaccurately-defined demand curve shifts on a blackboard. But there is no point in talking about a silly micro ceteris-paribus curve when we’re positing macroeconomic catastrophe that affects literally everything else in the world economy. > > The only accurate classroom demonstration of the US defaulting on its entire debt is dousing the entire blackboard with gasoline, and then lighting a match. There would be a period of adjustment. This is what happens after every bubble. Malinvestment is liquidated. The debt enablers will take a bath. Resources will be diverted to more productive ends. Your scary stories are just not backed up by facts. Think of default as the popping of a bubble. ---
**Author:** ![Lemur866](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/lemur866/32/434_2.png) [@Lemur866](https://boards.straightdope.com/u/Lemur866)\ **Post date:** [March 22, 2018, 9:34pm UTC](https://boards.straightdope.com/t/you-owe-21-trillion/810711/63 "2018-03-22T21:34:31Z")
Seriously? That’s one hell of a bubble. I mean, it makes sense. People lent the American government money. That was a bad investment, because the government isn’t trustworthy. So, in order to rationalize the market the government should do something to help bondholders understand that the government isn’t trustworthy. And the best way to do that is to default on the debt! That’s gonna bust the market bubble in government debt, and put things where they ought to be, with people not trusting government debt and finally prove the goldbugs were right all along. Or…maybe the government shouldn’t deliberately implode the global economy just to prove that the goldbugs who believed in the imminent implosion of the global economy were right? Like, if you were riding on an airplane, and you felt the airplane was unsafe, and all the other passengers ignored you and kept telling you that the airplane was safe, the pilot should start chucking grenades into the passenger compartment to change their minds? Or not do that? ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [March 22, 2018, 9:56pm UTC](https://boards.straightdope.com/t/you-owe-21-trillion/810711/64 "2018-03-22T21:56:29Z")
> [@WillFarnaby](#): > > There would be a period of adjustment. This is what happens after every bubble. Malinvestment is liquidated. The debt enablers will take a bath. Resources will be diverted to more productive ends. Your scary stories are just not backed up by facts. > > Think of default as the popping of a bubble. I see you don’t believe in the market. Government debt has the lowest interest rate of pretty much anything, which shows that the market considers it safe. But you think that it is malinvestment, so the market is wrong. Kind of what like the rabid socialists say. Or the Communists. ---
**Author:** ![Johnny\_Ace](https://avatars.discourse-cdn.com/v4/letter/j/6bbea6/32.png) [@Johnny\_Ace](https://boards.straightdope.com/u/Johnny_Ace)\ **Post date:** [March 23, 2018, 12:12am UTC](https://boards.straightdope.com/t/you-owe-21-trillion/810711/65 "2018-03-23T00:12:55Z")
> [@WillFarnaby](#): > > There would be a period of adjustment. This is what happens after every bubble. Malinvestment is liquidated. The debt enablers will take a bath. Resources will be diverted to more productive ends. Your scary stories are just not backed up by facts. Neither is your reassuring one, since it’s never happened. > [@](#): > > Think of default as the popping of a bubble. A bubble on which the global market system is based. Somehow I don’t share your optimism. But this is all just a cover for justifying adding a trillion and a half to the debt anyway. “No, really, it’s not all that much!” ---
**Author:** ![WillFarnaby](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/willfarnaby/32/514_2.png) [@WillFarnaby](https://boards.straightdope.com/u/WillFarnaby)\ **Post date:** [March 23, 2018, 10:45am UTC](https://boards.straightdope.com/t/you-owe-21-trillion/810711/66 "2018-03-23T10:45:17Z")
> [@Voyager](#): > > I see you don’t believe in the market. Government debt has the lowest interest rate of pretty much anything, which shows that the market considers it safe. But you think that it is malinvestment, so the market is wrong. > Kind of what like the rabid socialists say. Or the Communists. Do you understand bubbles at all? Bubbles evolve from a cluster of errors on the market. Do you deny bubbles? (There are (were?) some Chicago flavored economists who deny bubbles). Yes, the market can be “wrong” it’s been wrong on many occasions. The “market” is shorthand for the summation of voluntary interactions between economic actors. The government is not big on voluntary interactions. It’s creditworthiness is a function of how well its prey society is producing and its ability to skim some off the top, to use a euphemism. You could argue that slavery was a bubble in a similar way. The plantation owners probably had pretty good credit as long as they had productive victims. ---
**Author:** ![WillFarnaby](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/willfarnaby/32/514_2.png) [@WillFarnaby](https://boards.straightdope.com/u/WillFarnaby)\ **Post date:** [March 23, 2018, 10:46am UTC](https://boards.straightdope.com/t/you-owe-21-trillion/810711/67 "2018-03-23T10:46:23Z")
> [@Johnny\_Ace](#): > > But this is all just a cover for justifying adding a trillion and a half to the debt anyway. “No, really, it’s not all that much!” Uhhh, what? ---
**Author:** ![WillFarnaby](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/willfarnaby/32/514_2.png) [@WillFarnaby](https://boards.straightdope.com/u/WillFarnaby)\ **Post date:** [March 23, 2018, 10:53am UTC](https://boards.straightdope.com/t/you-owe-21-trillion/810711/68 "2018-03-23T10:53:05Z")
> [@Lemur866](#): > > Seriously? > > That’s one hell of a bubble. I mean, it makes sense. People lent the American government money. That was a bad investment, because the government isn’t trustworthy. So, in order to rationalize the market the government should do something to help bondholders understand that the government isn’t trustworthy. And the best way to do that is to default on the debt! That’s gonna bust the market bubble in government debt, and put things where they ought to be, with people not trusting government debt and finally prove the goldbugs were right all along. > > Or…maybe the government shouldn’t deliberately implode the global economy just to prove that the goldbugs who believed in the imminent implosion of the global economy were right? > > Like, if you were riding on an airplane, and you felt the airplane was unsafe, and all the other passengers ignored you and kept telling you that the airplane was safe, the pilot should start chucking grenades into the passenger compartment to change their minds? Or not do that? Thank you for taking the time to understand the argument. The purpose wouldn’t be to prove goldbugs right. It would have the following positive outcomes: -the only moral decision: generations of Americans should not be responsible for Boomer foolishness -starve the beast: this default would considerably handcuff the government for quite some time. No more military adventures and other poor spending choices. -resource allocation, increased supply: this default would shake up global capital allocation and increase investment in productive capacity. ---
**Author:** ![Czarcasm](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/czarcasm/32/4050_2.png) [@Czarcasm](https://boards.straightdope.com/u/Czarcasm)\ **Post date:** [March 23, 2018, 11:30am UTC](https://boards.straightdope.com/t/you-owe-21-trillion/810711/69 "2018-03-23T11:30:55Z")
“This government doesn’t work, and I’ll prove it…even if I have to destroy it myself!” ---
**Author:** ![WillFarnaby](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/willfarnaby/32/514_2.png) [@WillFarnaby](https://boards.straightdope.com/u/WillFarnaby)\ **Post date:** [March 23, 2018, 12:07pm UTC](https://boards.straightdope.com/t/you-owe-21-trillion/810711/70 "2018-03-23T12:07:34Z")
> [@Czarcasm](#): > > “This government doesn’t work, and I’ll prove it…even if I have to destroy it myself!” “This government works, and I’ll prove it…even if I have to impoverish generations in order to pay for my generation’s incompetence and profligacy.” ---
**Author:** ![WillFarnaby](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/willfarnaby/32/514_2.png) [@WillFarnaby](https://boards.straightdope.com/u/WillFarnaby)\ **Post date:** [March 23, 2018, 12:21pm UTC](https://boards.straightdope.com/t/you-owe-21-trillion/810711/71 "2018-03-23T12:21:39Z")
It is no coincidence Boomer educators and politicians are pushing democratic socialism and government indebtedness so fiercely. There is no way the government will be able to take care of Boomers, who lived selfishly and without foresight, without increased spending. The realities of resource scarcity will hit Gen X and Millenials like a punch in the face and default will be the option for economic renewal. The other option will be to print like mad and die slowly (Japan). ---
**Author:** ![Ravenman](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/ravenman/32/2929_2.png) [@Ravenman](https://boards.straightdope.com/u/Ravenman)\ **Post date:** [March 23, 2018, 1:41pm UTC](https://boards.straightdope.com/t/you-owe-21-trillion/810711/72 "2018-03-23T13:41:23Z")
> [@WillFarnaby](#): > > “This government works, and I’ll prove it…even if I have to impoverish generations in order to pay for my generation’s incompetence and profligacy.” I see. When it is convenient for your argument, the national debt is completely divorced from the finances of individual Americans. Also when it is convenient for your argument, the national debt is a crushing load on the finances of individual Americans. ---
**Author:** ![Lemur866](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/lemur866/32/434_2.png) [@Lemur866](https://boards.straightdope.com/u/Lemur866)\ **Post date:** [March 23, 2018, 4:44pm UTC](https://boards.straightdope.com/t/you-owe-21-trillion/810711/73 "2018-03-23T16:44:48Z")
In a way Will is right. If in the future the debt ever does become a crushing burden on future taxpayers, the debt will have to be managed in ways that will screw over the debt holders. Governments have for millennia borrowed money, and when the time came to pay back the money, found ways to avoid having to do that, and these ways are well known. However, for America outright repudiating the debt is extremely unlikely. What is vastly more likely is simply to pay off our creditors their full nominal value, but using highly devalued dollars to do it. The one big advantage the United States has compared to Greece or Medieval princes is that our debts are denominated in dollars, not Euros or gold. Greece can’t print Euros, princes can’t spin straw into gold. But the United States can very easily print dollars. Of course there are other solutions. Round up some oligarchs, accuse them of treason, and confiscate their fortunes. If we owe money to some other country, just declare war on that country. Or a smarter way to get the money from the oligarchs is to just raise taxes on the super-rich. Once we explain that although they’ll have to pay a lot more in taxes nowadays, at least they get to keep their heads and a very large fraction of their fortune to boot. We’ll see how they prefer to play it out. But as of March 23, 2018 the current level of debt is not a crushing burden. Interest rates are near zero. We don’t currently have to pay crushing taxes to finance the debt. It makes no sense to default or take drastic steps now. That will wait until the crisis actually comes. And the crisis might be decades in the future, and might never happen. And if we do need to take drastic steps now, a much better method would be to cut spending and raise taxes. I know, I know, that’s crazy talk. Much more sensible to just keep borrowing and spending like there’s no tomorrow and then declare national bankruptcy. ---
**Author:** ![Try2B\_Comprehensive](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/try2b_comprehensive/32/65_2.png) [@Try2B\_Comprehensive](https://boards.straightdope.com/u/Try2B_Comprehensive)\ **Post date:** [March 24, 2018, 10:31pm UTC](https://boards.straightdope.com/t/you-owe-21-trillion/810711/74 "2018-03-24T22:31:26Z")
> [@Hellestal](#): > > I want to emphasize here that I don’t think this was either 1) easily predictable in advance, or 2) a guide to future electoral strategy. > > Imagine some kids who aren’t allowed to play ball in the house because of a very nice heirloom vase that they almost destroyed earlier. So they’re being good, and they’re outside, and it just so happens that there’s a window open, and the ball sails perfectly, almost mystically, through the window, off a wall, into a different room with the vase, off another wall, and finally into the vase itself. Which crashes to the ground. (This is not a perfect analogy – Fivethirtyeight pretty much always had Trump with a respectable albeit small chance of winning – but it gets the point across.) > > Even after reconstructing the strange series of cause-and-effect bounces, that does not mean those bounces could have been previously predicted, and it also does not mean that we should fear a similar thing happening in the future. The last-minute Comey announcement might possibly have been another bounce of this ball – quite plausibly, without this announcement, Trump would not have gotten a last minute boost to win. But that was also something not especially predictable, and not likely to happen again. > > What I find interesting about this particular bounce of the ball is, well, that there were certain states that actually flipped from 2012. And this bounce of the ball might explain those particular states and why they flipped, at least for this particular election cycle. > > Based on what I’ve read, I just don’t think it’s a coincidence that Hillary lost states to Trump that she previously lost to Bernie. But I also don’t think this is any kind of guide to future political “planning” or whatever. It was just a weird bounce. Trying to wrangle this discussion back to the main topic of the thread: I think politics is based a lot more on strange bounces than people generally credit – changes in demographics, the economy, candidate-specific factors, etc., that no one can predict in advance – and all of those random bounces don’t leave a whole lot of room leftover for rational policy analysis. So pretty simple economic ideas, like, “Hey, maybe it’s a good time to pay down debt during a boom, because deficits will explode again next recession” get thoroughly ignored. > > Until the pressure becomes too great. Perhaps it was flukey. I certainly was surprised by the result, and I am hardly alone in that. Then again, there are other theories out there, see [Trump Hacked the Media Right Before Our Eyes](https://www.nytimes.com/2018/03/21/opinion/trump-facebook-cambridge-analytica-media.html) > [@](#): > > But the media format that really made him president, the one whose weaknesses and perversities and polarizing tendencies he brilliantly exploited, wasn’t Zuckerberg’s unreal kingdom; it wasn’t even the Twitter platform where Trump struts and frets and rages daily. It was that old pre-internet standby, broadcast and cable television, and especially TV news. > [@](#): > > Nothing that Cambridge Analytica did to help the Trump campaign target swing voters (and there’s reason to think it didn’t do as much as it claimed) had anything remotely like the impact of this #alwaysTrump tsunami, which probably added up to more than $2 billion in effective advertising for his campaign during the primary season, a flood that drowned all of his rivals’ pathetic tens of millions. And as cynical as I believe the lords of Silicon Valley to be, the more important cynicism in 2016 belonged to those television execs who were fine with enabling the wild Trumpian takeover of the G.O.P., because after all Republicans deserved it and Hillary was sure to beat him in the end. > [@](#): > > Except that she didn’t beat him, in part because he also exploited the polarization that cable news, in particular, is designed to feed. In 2016 this polarization didn’t just mean that Fox became steadily more pro-Trump as he dispatched his G.O.P. rivals; it also meant that a network like CNN, which thrives on Team Red vs. Team Blue conflict, felt compelled to turn airtime over to Trump surrogates like Jeffrey Lord and Corey Lewandowski and Kayleigh McEnany because their regular stable of conservative commentators (I was one of them) simply wasn’t pro-Trump enough. For all that, the author does agree with your point that it would be a tough trick to pull off twice. Thing is, in the context of the debt debate, the issue hardly starts with Trump. People commonly say that the ‘modern’ GOP’s position on debts and deficits goes all the way back to Reagan. It may actually go back much farther than that, see[How Republicans Learned to Sell Tax Cuts for the Rich](https://www.nytimes.com/2017/12/18/opinion/republicans-tax-cuts-rich.html) > [@](#): > > But the Republican tax strategy has roots in the American populist tradition, too. That strategy is to disregard experts and rile up the base with tax policy arguments that would not survive professional scrutiny. > [@](#): > > the man who first put this strategy to work for rich people was Andrew Mellon, the millionaire who became secretary of the Treasury after World War I. Poor veterans of the war were clamoring for expensive public benefits. Rich men wanted their income taxes rolled back. > > Mellon squared the circle by inventing a supply-side argument: Cutting income tax rates would actually increase tax revenues. In particular, he said, cutting the top income tax rates would encourage rich people to pull their money out of tax shelters and invest in creating jobs. Or, as Treasury Secretary Steven Mnuchin has said of the current Republican tax plan, cutting income taxes “will pay for itself with growth.” > [@](#): > > Instead of an economic model, he gave his readers a folksy anecdote about an overtaxed farmer. He also raised money for a grass-roots campaign to mobilize support for income tax cuts in parts of the country where almost no one was rich enough to benefit personally from those tax cuts. These activists did not have to win a majority of the public. They just had to win enough grass-roots support to intimidate members of Congress in a few key districts. > > The activists got a tax cut, but more important, they wrote a playbook. Veterans of the campaign for the Mellon plan kept campaigning for income tax cuts through World War II. When runaway inflation put tax reform back on the agenda in the 1970s, conservative activists dusted off those old policy proposals. They copied the old tactics, too, including the recruitment of organizers to run grass-roots campaigns far outside Washington. These conservative activists picked up Mellon’s book and they copied Mellon’s argument: Tax cuts for the rich will pay for themselves with economic growth. I’ll let you read the rest of the article and decide for yourself, but it brings us back to the notion that we are dealing with classic bullshit, promulgated from the top and targeted at vulnerable suckers, and that the solution to the debt problem is really figuring out how to counteract this effect. But it has been going on for at least 100 years, and enough of the population falls for it every time that we are now in the situation of having substandard education, health care, infant mortality rates and many other problems relative to the rest of the world, and $21 trillion in debt to boot. Cynical, selfish wealthy people who don’t give a rip about the welfare of the general population drive policy on this issue over and over and over again. It reminds me of another line from [The Federalist 1](http://avalon.law.yale.edu/18th_century/fed01.asp), describing how (necessary) vigorous good government is easily demonized by those with less worthy motives: > [@](#): > > And yet, however just these sentiments will be allowed to be, we have already sufficient indications that it will happen in this as in all former cases of great national discussion. A torrent of angry and malignant passions will be let loose. To judge from the conduct of the opposite parties, we shall be led to conclude that they will mutually hope to evince the justness of their opinions, and to increase the number of their converts by the loudness of their declamations and the bitterness of their invectives. An enlightened zeal for the energy and efficiency of government will be stigmatized as the offspring of a temper fond of despotic power and hostile to the principles of liberty. An over-scrupulous jealousy of danger to the rights of the people, which is more commonly the fault of the head than of the heart, will be represented as mere pretense and artifice, the stale bait for popularity at the expense of the public good. It will be forgotten, on the one hand, that jealousy is the usual concomitant of love, and that the noble enthusiasm of liberty is apt to be infected with a spirit of narrow and illiberal distrust. On the other hand, it will be equally forgotten that the vigor of government is essential to the security of liberty; that, in the contemplation of a sound and well-informed judgment, their interest can never be separated; and that a dangerous ambition more often lurks behind the specious mask of zeal for the rights of the people than under the forbidden appearance of zeal for the firmness and efficiency of government. History will teach us that the former has been found a much more certain road to the introduction of despotism than the latter, and that of those men who have overturned the liberties of republics, the greatest number have begun their career by paying an obsequious court to the people; commencing demagogues, and ending tyrants. > [@WillFarnaby](#): > > The “market” is shorthand for the summation of voluntary interactions between economic actors. The government is not big on voluntary interactions. It’s creditworthiness is a function of how well its prey society is producing and its ability to skim some off the top, to use a euphemism. > > You could argue that slavery was a bubble in a similar way. The plantation owners probably had pretty good credit as long as they had productive victims. What a perfect illustration of my last point! Yeah, the government is motivated by anti-volition sentiment, and is a predator of the public in the same way the slavers were predators of black people. Therefore, when a well-intentioned leader like Obama proposes higher taxes on people with incomes above $250k, the people to whom a greater and greater share of the national wealth is being directed at the expense of everyone else, it’s equivalent to SLAVERY! Yeah. But people swallow this. Persuasion is the issue. Hearts and minds, man. ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [March 24, 2018, 11:01pm UTC](https://boards.straightdope.com/t/you-owe-21-trillion/810711/75 "2018-03-24T23:01:25Z")
> [@WillFarnaby](#): > > Do you understand bubbles at all? Bubbles evolve from a cluster of errors on the market. Do you deny bubbles? (There are (were?) some Chicago flavored economists who deny bubbles). Yes, the market can be “wrong” it’s been wrong on many occasions. OMG! You must be a socialist! 🙂 I know bubbles quite well, having lived through a few of them. They involve the commodity being bid up in price. Are government bonds bid up in price? Unreasonably? Is there any reason to doubt the inherent safety of bonds, besides the irrational actions of the moron in the White House that is? > [@](#): > > The “market” is shorthand for the summation of voluntary interactions between economic actors. The government is not big on voluntary interactions. It’s creditworthiness is a function of how well its prey society is producing and its ability to skim some off the top, to use a euphemism. Explain how the government forces anyone to buy bonds? I’m not counting Social Security. > [@](#): > > You could argue that slavery was a bubble in a similar way. The plantation owners probably had pretty good credit as long as they had productive victims. If you consider yourself a victim of the US government you are free to leave - unlike the slaves. ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [March 24, 2018, 11:10pm UTC](https://boards.straightdope.com/t/you-owe-21-trillion/810711/76 "2018-03-24T23:10:25Z")
> [@WillFarnaby](#): > > It is no coincidence Boomer educators and politicians are pushing democratic socialism and government indebtedness so fiercely. There is no way the government will be able to take care of Boomers, who lived selfishly and without foresight, without increased spending. The realities of resource scarcity will hit Gen X and Millenials like a punch in the face and default will be the option for economic renewal. The other option will be to print like mad and die slowly (Japan). Oh, I see, Trump and the Republicans in Congress who pushed through the tax cut that will balloon the deficit are pushing Democratic Socialism. Riiiight. I’m pretty sure Goldwater complained about the deficit over 50 years ago. I don’t feel a crushing burden yet. If you do, I’d advise you to get a better job. Now, I’m in favor of shrinking the deficit now while times are good, the way Bush should have when times were good. Because a deficit is useful in a recession, but the stimulus is unnecessary in good times. But that is basic Keynesian economics, which is like kryptonite to conservatives. ---
**Author:** ![WillFarnaby](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/willfarnaby/32/514_2.png) [@WillFarnaby](https://boards.straightdope.com/u/WillFarnaby)\ **Post date:** [March 25, 2018, 8:56pm UTC](https://boards.straightdope.com/t/you-owe-21-trillion/810711/77 "2018-03-25T20:56:46Z")
> [@Voyager](#): > > OMG! You must be a socialist! 🙂 > I know bubbles quite well, having lived through a few of them. They involve the commodity being bid up in price. Are government bonds bid up in price? Unreasonably? Is there any reason to doubt the inherent safety of bonds, besides the irrational actions of the moron in the White House that is? The US government does not have the ability to push taxes higher than 20% of GDP. There is no way the government can cover its debt without money printing. There is no reason the government couldn’t pay the nominal value on its bonds in US dollars, but this little more than a tautology. Bondholders are going to be soaked. Either the dollar will be debased, or there will be a default. > [@](#): > > Explain how the government forces anyone to buy bonds? I’m not counting Social Security. They don’t force anyone to buy bonds. They force taxpayers to pay off their bonds. The better they are at doing this, the safer the bonds appear to investors. This is not a voluntary situation. > [@](#): > > If you consider yourself a victim of the US government you are free to leave - unlike the slaves. What’s your point? How does that address my claim at all? ---
**Author:** ![WillFarnaby](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/willfarnaby/32/514_2.png) [@WillFarnaby](https://boards.straightdope.com/u/WillFarnaby)\ **Post date:** [March 25, 2018, 9:07pm UTC](https://boards.straightdope.com/t/you-owe-21-trillion/810711/78 "2018-03-25T21:07:56Z")
> [@Voyager](#): > > Oh, I see, Trump and the Republicans in Congress who pushed through the tax cut that will balloon the deficit are pushing Democratic Socialism. Riiiight. What do you call it? > [@](#): > > I’m pretty sure Goldwater complained about the deficit over 50 years ago. I don’t feel a crushing burden yet. If you do, I’d advise you to get a better job. Your anecdotes are always thrilling. Your generation ballooned the debt to insane levels never seen in US history. I blame Vietnam and public schools for how fucked up they are, but facts are facts. Millennials and GEN Xers will suffer if they don’t wise up politically and cut off the perennially coddled Boomers from the government teat. > [@](#): > > Now, I’m in favor of shrinking the deficit now while times are good, the way Bush should have when times were good. Because a deficit is useful in a recession, but the stimulus is unnecessary in good times. > But that is basic Keynesian economics, which is like kryptonite to conservatives. Too bad the Boomers never followed this strategy. Indeed no government has followed this strategy. Even if it worked, it is simply not politically feasible. ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [March 25, 2018, 9:42pm UTC](https://boards.straightdope.com/t/you-owe-21-trillion/810711/79 "2018-03-25T21:42:36Z")
> [@WillFarnaby](#): > > The US government does not have the ability to push taxes higher than 20% of GDP. There is no way the government can cover its debt without money printing. There is no reason the government couldn’t pay the nominal value on its bonds in US dollars, but this little more than a tautology. Bondholders are going to be soaked. Either the dollar will be debased, or there will be a default. [Here](https://en.wikipedia.org/wiki/List_of_countries_by_tax_revenue_to_GDP_ratio) is a list of countries with tax revenue as a percent of GDP. Lots of countries - including third world shitholes like Australia - have tax revenues much higher. Our supposedly super high tax rate is more conservative bullshit. So explain why we couldn’t have a higher tax rate. The rest of this paragraph is just about incomprehensible. Government paying nominal value on bonds in US dollars? You realize that bonds can be called in and paid face value in dollars, right? What do you think the government pays off bonds in? Quatloos? Where the money would come from to do this is another matter. Bondholders who get bonds paid off at face value, even if early, are not soaked. Has happened to me for municipal bonds, and I felt fine. Dollar debased? Is that another whine for the gold standard? Search any of a hundred threads to find out why that is a stupid idea. Or does it mean that the exchange rate drops. I thought that kind of thing stopped being a problem when the dollar was high under Obama. And our exchange rate dropping helps exports, and any one who took Econ 101 knows. Or do you have another meaning for debased? > [@](#): > > They don’t force anyone to buy bonds. They force taxpayers to pay off their bonds. The better they are at doing this, the safer the bonds appear to investors. This is not a voluntary situation. Taxpayers elected the people who are spending the money, so I fail to see the scandal in them having to pay the bills. Now the non-citizen immigrants who don’t get to vote but still have to pay taxes might have a beef. > [@](#): > > What’s your point? How does that address my claim at all? You brought up slavery. If you feel so oppressed you can split. ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [March 25, 2018, 10:00pm UTC](https://boards.straightdope.com/t/you-owe-21-trillion/810711/80 "2018-03-25T22:00:11Z")
> [@WillFarnaby](#): > > What do you call it? I wish we had some democratic socialism around here, like in Europe where the average person gets reasonable health care for a reasonable price. But Republicans are pushing the deficit, in case you hadn’t noticed. Mitch McConnell is not a boomer. Trump is just barely one. Obama was too young to be one. So your boomer conspiracy theory does not hold water. Or do you mean Social Security and Medicare? Social Security of course predates WW II and any boomer, and Medicare was passed before any boomers could even vote. Now perhaps you think Reagan was for democratic socialism because he did a good job in leading the revision of Social Security that made it viable much longer. And of course getting more money by raising or eliminating the cap would be easy. I hit the cap every year for the past 20 or so, and I would have been happy to pay more. > [@](#): > > Your generation ballooned the debt to insane levels never seen in US history. I blame Vietnam and public schools for how fucked up they are, but facts are facts. Boomers got shot at in Vietnam, they did not start the war. You can blame the greatest generation for that. And the deficit ballooned under Reagan, remember? And an insult doesn’t explain why government bonds represent a bubble. Try again. > [@](#): > > Millennials and GEN Xers will suffer if they don’t wise up politically and cut off the perennially coddled Boomers from the government teat. I’m confused. Do you hate democratic socialists like Ronald Reagan, or do you just hate old people? > [@](#): > > Too bad the Boomers never followed this strategy. Indeed no government has followed this strategy. Even if it worked, it is simply not politically feasible. Clinton did. Remember the budget surplus? Remember how Bush increased the deficit in good times so that when Obama needed to spend to reduce the impact of the Bush recession it was more painful than it should be? And how the deficit decreased under Obama as times got better, just as it should? Maybe you should confine your hate to Republicans, not boomers. [Previous page](https://boards.straightdope.com/t/you-owe-21-trillion/810711.md?page=3) [Next page](https://boards.straightdope.com/t/you-owe-21-trillion/810711.md?page=5)